Scrap PDS altogether, says chief economist Basu
27 Oct 2010
The government seems to be in a dilemma over whether to try and strengthen the creaking public distribution system (PDS) or scrap it altogether. While the Sonia Gandhi-led National Advisory Council's latest proposals on enhanced food security hinge on higher procurement and increased reliance on the public distribution system, there is a strong contrary view in the government.
In a paper circulated within the government, chief economic adviser to the finance ministry Kaushik Basu has argued that what is needed for food security to work is a reduced role for the Food Corporation of India, winding up of the PDS system and interventions in the food market.
Basu has said in his paper on food security, circulated in September that timely purchases and sales in the open market can help stabilise prices and these decisions need not require political clearance. Buy cheap and sell when prices either go up too high or fall too low is his recommendation.
The paper does not challenge the need for a food security law. In fact, it says this is doable, but seeks to underline the apprehension that it might be money down the drain unless targeted precisely.
Plans to enhance food security through the PDS network need a hard look as a massive increase in procurement might prove unmanageable.
Basu says the problem arises through food subsidy being handed over to poor households via ration shops. He refers to a study that says 70 per cent of wheat for the below poverty line (BPL) grouping does not reach beneficiaries.
